TC7 rates ease, but healthy earnings and a busy fixture programme paint a more neutral outlook for freight
- Singapore MR vessel supply stands at 21 ships against a 90-day moving average of 23. Incremental demand is neutral, and the FSD model forecasts rates to hold effectively flat from WS 366 to WS 363 over the coming week into the 11 to 20 May load window. The supply signal is mildly supportive, and the overall FSD picture confirms the market’s broadly neutral fundamental balance.
- Sentiment has softened this week, with spot rates down approximately 12 WS points from last week’s levels. The prompt Pertamina programme is placing older vessels on subs, leaving well-approved tonnage comparatively ample, and cargoes quoted in the market are not short on offers. That said, at current rate levels TC7 earnings remain healthy in the mid-to-high 30s $/day TCE.
- Fixture activity over the past three days has been strong and geographically diverse, arguing against the bearish market sentiment. Forever Conviviality fixed loading Singapore for USWC at $2.66m lumpsum for a 15-17 May laycan, and Atlantic Sunshine fixed loading Singapore for WC Mexico at $2.80m for 08 May; the latter reflecting the gasoline arb into West Coast Mexico, which is open in May at +0.15 cpg and holds marginally positive through August, one of the few arbs currently open out of Singapore.
- Three Australia-bound fixtures emerged at 355-365 WS range: Yuan Jing He placed on subs for AUS/NZ at 365 WS, Nord Vantage on subs for Port Hedland at 355 WS, and Dee4 Larch on subs for Australia at 360 WS, all mid-May laycans, reflecting the continued pull of post-conflict Pacific resupply demand. Shorter-haul flows also featured, with Alpine Spirit placed on subs Singapore to Cilacap at $0.70m and Red Ruby fixed Singapore to Jakarta at $0.50m.
- With freight fundamentals neutral, earnings healthy, and fixture activity strong despite the softer market sentiment, TC7 should trade sideways. Fixtures should be on a case-by-case basis
About the Author
Michael Ryan, our Freight Commodity Owner at Sparta, brings over a decade of experience with Trafigura in the energy sector managing risk across products and regions before becoming Head of Risk for subsidiary Puma Energy. Michael then joined the Trafigura commercial team trading freight while successfully growing the physical fleet through strategic dealmaking.
Connect: https://www.linkedin.com/in/mgryan/
About Sparta
Founded in 2020, Sparta made waves in the commodity analytics space in March 2022 when it secured a $6m series A investment from Singular. This success then later snowballed into a further $17.5 million in a series A funding round led by the technology venture capital firm FirstMark, with participation from existing shareholder, Singular.
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